Learn more about how innovation makes Ontario one of the best destinations for your company, whether you're looking to develop your next big idea or discover breakthrough technologies to support your venture.

• Economist Intelligence Unit Reports
• Valuing the Forest: Green Innovations in Forestry (video)
• FAQs About R&D in Ontario
• Useful R&D links and contacts

Economist Intelligence Unit Reports

As part of our ongoing series of innovation-focused publications and events, Ontario supported the development of the following reports published by the Economist Intelligent Unit:

	REPORT	DOWNLOAD	DATE
	Talent Strategies for Innovation: Japan Based on the results of a survey of 50 senior executives in Japan, this report examines how Japanese companies face the challenge of recruiting, nurturing and retaining talented people to ensure their organizations remain innovative.	PDF English Japanese 24 pages	September 2010
	Talent Strategies for Innovation Globalization has turned talent management into a key strategic issue that has become the responsibility of the C-suite in many organizations. Based on a survey of about 180 senior executives from around the world, this report looks at how companies approach the challenge of recruiting, nurturing and retaining talented people for innovation. It underlines the need for businesses to develop flexible policies that will enable them to recruit and retain talent in both their home and foreign markets.	PDF English French German Japanese 16 pages	September 2009
	Fertile ground: Cultivating a Talent for Innovation This white paper is based on a survey of 200 senior executives worldwide, in-depth interviews with 15 senior executives and experts in innovation, and extensive research by subject matter experts. It identifies five general factors, driven by government and enterprises, that contribute to innovation. PODCAST Click on the Play button to start listening. (Total Time: 16 minutes 27 seconds) AUDIO FILE Right-click to download audio file.	PDF English French German Japanese 31 pages	February 2009

Valuing the Forest

Forestry has been the backbone of business in Northern Ontario for the past century. But times have changed and recent years have seen a major slowdown in the forest sector globally. This 24-minute documentary shows how Ontario’s forestry industry has adapted and innovated to respond to these changes. Valuing the Forest follows the businesses and researchers instrumental to the region’s evolution from forestry and bulk commodity production to value-added products such as engineered wood, bioplastics, biomass pellets, and biodiesel, as well as activities such as biorefining. Watch the video to find out how this historic transformation, and the region's continuing development as a centre of green innovation, are creating a wealth of opportunities for investors.

FAQs about R&D in Ontario

1. What types of activities and costs qualify for Ontario's R&D tax incentives?
2. I'm currently in a loss position. Why should I care about deductions that are just going to expire?
3. How do Canada's R&D incentives compare with other leading industrial countries?
4. What if my head office wants to retain ownership of the intellectual property developed in Ontario?
5. Will my options for structuring my R&D investment be limited?

1. What types of activities and costs qualify for Ontario's R&D tax incentives?

A wide range of activities qualify for Scientific Research and Experimental Development (SR&ED) benefits in Ontario. These include:

• New product development
• Development of new or improved materials
• Manufacturing process improvements
• Software development
• Clinical trials of new drugs or medical devices

To be eligible for SR&ED benefits, the activities must meet three key criteria:

• R&D must demonstrate scientific or technological advancement. In other words, it must involve experimentation or analysis beyond standard practice, and it must "push the barriers."
• R&D must focus on areas of scientific or technological uncertainty where it is unclear whether or how goals can be achieved.
• R&D must have scientific and technical content as evidenced by systematic, well-documented investigation.

A U.S. taxpayer can elect to claim the alternative incremental credit for R&D, which is determined on a different basis.

Compared to the United States, Canada has a much broader range of R&D costs that qualify for the tax credits. In addition, the Canadian investment tax credit generally applies to every dollar of R&D. In the U.S., the federal R&D tax credit generally applies to incremental R&D expenses. In other words, in the U.S. you generally do not earn any R&D tax credits if your current R&D expenses do not exceed your base amount derived from your past gross receipts and past R&D spending.

2. I'm currently in a loss position. Why should I care about deductions that are just going to expire?

Write-offs of R&D costs may be deferred in Ontario. If an Ontario company does not need to take the deductions in the year they are incurred, the R&D expenses can be carried forward indefinitely. By comparison, in the U.S., R&D costs must be expensed in the year they are incurred. They then become losses, subject to expiry.

3. How do Canada's R&D incentives compare with other leading industrial countries?

Within a global context, Canada is considered to have one of the world’s most generous SR&ED tax incentives, ranking third amongst OECD countries, after France and Ireland and Belgium, with the two latter countries tied for second place.

4. What if my head office wants to retain ownership of the intellectual property developed in Ontario?

Your head office can do that. An Ontario corporation can claim R&D tax incentives even if its R&D costs are covered, in whole or in part, by payments from a foreign corporation or government.

The Ontario subsidiary could do R&D under contract for its foreign parent and still claim the 20% federal investment tax credit. In certain cases, the Ontario subsidiary may also be able to claim the 10% refundable Ontario Innovation Tax Credit. The 20% refundable Ontario Business-Research Institute Tax Credit may also be available where the Ontario subsidiary subcontracts some of the R&D to an eligible research institute.

A foreign corporation paying for R&D performed by an unrelated Ontario company can benefit indirectly, since the Ontario company will be able to provide the service at a lower cost due to the tax benefits it receives.

5. Will my options for structuring my R&D investment be limited?

No. You have significant flexibility in structuring your R&D investment. Foreign and Ontario companies can benefit under a variety of scenarios:

• The foreign parent can contract with its Ontario subsidiary to perform R&D.
• The Ontario subsidiary of a foreign company can undertake R&D on its own.
• A foreign company can contract with an unassociated Ontario company to do R&D on its behalf.
• A foreign company can set up or acquire a minority interest in a small Canadian-controlled private corporation that performs R&D.

Useful R&D links and contacts

You can learn more about R&D in Ontario and Canada by visiting the following websites, or by getting in touch with the province’s R&D and business relocation experts.

Canada Revenue Agency - Get details about the Government of Canada’s Scientific Research and Experimental Development (SR&ED) tax incentive program.

Province of Ontario Business Support Programs - An overview of select Ontario government programs for business.

Contact the Province of Ontario - Use our directory of email and phone numbers to contact us directly for more information about relocating your business to Ontario.